Investors appear to be losing confidence in data visualization vendor Tableau Software (NYSE: DATA). The company recently announced better than expected results for its first quarter. But that did not stop the stock from falling 11% in a single day.

Tableau’s Financials

Tableau’s Q1 revenues grew 32% over the year to $171.7 million, ahead of the Street’s forecast of $163.8 million. This was a breakeven quarter for Tableau compared to the market’s projected loss of $0.09 per share.

By segment, License revenues grew 14% to $96.4 million and Maintenance and Services revenues grew 65% to $75.3 million. International revenues grew 52% to $31.7 million.

But despite the strong growth, the market is worried about Tableau’s deceleration. The 14% growth on License revenues was rather modest when compared with the 31% growth reported a year ago. Also, while Tableau may have surpassed market projections on earnings, its losses are still continuing to grow. For the first quarter of the year, losses have grown from $10 million reported a year ago to $45.6 million with sales and marketing expenses growing 47% to $106.1 million and R&D spend increasing 69% to $70.9 million. It, however, is taking some measures in controlling costs and announced plans to scale back hiring and capex spend for the year. Earlier in the year, Tableau had announced plans to add over 1,000 employees this year, but it has now reduced that number to 500-600 employees.

For the current quarter, Tableau forecast revenues of $190 million-$195 million. It expects to end the year with revenues of $835 million-$855 million, up from previous estimates of $830 million-$850 million.

Tableau’s Concerns

Over the past few months, Tableau has identified improving sales productivity and staying ahead in the competitive landscape as vital areas needing investment to regain lost market confidence.

With regards to improving sales team efficiency, Tableau has taken several steps over the past few months. For the current year, instead of hiring a larger team, Tabaleau is now focusing on making its existing team more successful by investing in training and onboarding, demand generation and lead flow, and new approaches to license structures to drive broader deployment. During the quarter, it rolled out new deal structures and flexible pricing schedules to its sales team to help them bag large scale opportunities. It also realigned its marketing and deal flow efforts to be more in line with the sales team. Tableau believes that these changes are bearing good results. During the quarter, leads increased 40% over the year and it saw an all-time high number of offers. It will take some time for these leads and offers to be converted to revenues, but it is a good start.

To stave off competition, Tableau has been investing in product development. While products from rivals such as Qlik continue to thrive, Tableau is convinced that given its ease-of-use, rich analytical dashboards, embedded analytics, reporting, and mobile capabilities give it a strong advantage. Most of all, it believes in its hybrid data architecture platform that allows customers to connect directly to existing data platforms and database infrastructure and query it live and combine results in a single dashboard. Tableau continues to improve its offerings as well. During the last quarter, it released Tableau 9.3 for faster data analysis and collaboration and has already shipped the beta for Tableau version 10 that is expected to be released this summer.

To improve its capabilities, Tableau also announced the acquisition of HyPer, the high-performance database system that was first developed as a research project at the Technical University of Munich. Tableau plans to leverage HyPer’s lean memory database system to deliver faster analytics and enhanced data integration. Terms of the deal were not disclosed.

Tableau may be making big advancements in its offerings and it does remain an impressive product in the market. But its rising costs, especially with slowing growth in revenues, is a point of concern. As Barclays analyst Raimo Lenschow puts it,

“We continue to believe that Tableau’s issues are predominantly caused by growing pains around sales, given the increased scale and to a smaller degree due to the increased number of competitors rather than structural issues”.

Tableau’s stock is trading at $47.85 with a market capitalization of $3.56 billion. It has fallen significantly from the high of $131.34 it had peaked to in July last year. In February this year, it had fallen to a year low of $36.60.